Pet Care in Germany

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Executive Summary

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German pet care records slightly slower growth in 2017

Generally speaking, 2017 was another successful year for pet care in Germany. The industry recorded further growth in both volume and current value terms, mainly thanks to premiumisation, innovation and rising demand for specialist products. Nevertheless, current value growth remained below the CAGR of the review period, with signs of a slowdown possibly caused by the industry’s high level of maturity and competition.

Growing number of alternatives impact sales development

In 2017, alternatives to industrially prepared and store-bought products continued to grow in significance in Germany. Many consumers opted for more flexible solutions, mostly with regard to pet food. Mixed concepts, home-prepared food and more natural or appropriate alternatives, such as BARF, grew in popularity, thereby limiting the potential for standard pet food. At the same time, this created space for new food products, additives, mixers and even dietary supplements, thus offering potential for growth. Sales of alternatives to regular pet food and pet products were mostly offset by the general trend towards products offering better quality, greater functionality or free from ingredients which may be harmful or cause problems.

Market fragmentation increases

With a growing variety of, and demand for, more flexible alternatives, new players emerged in German pet care in 2016, thereby increasing the industry’s levels of fragmentation and competition. In addition, companies which were considered pure niche players over the review period managed to grow into respectable and renowned manufacturers, thus increasing the pressure on established multinationals and even domestic players. Even within pet products, the impact of companies with a focus on areas other than pet care, such as private label players, also increased. Innovation and the continuously growing vast product portfolios of the leading international manufacturers, however, served to secure their strong positions in German pet care, despite the fierce level of competition.

Popularity of specialist retailers fuels the growth of private label

Specialist retailers continued to lead pet care in 2017, growing their store-based as well as their internet sales. With the rising penetration and popularity of these specialists, many of their private label lines achieved greater recognition and acceptance among many German consumers. Larger selections or additional benefits such as charitable donations for every purchase contributed to the increasing success of these product lines. Consequently, more consumers opted to visit these stores or make private label purchases via their online platforms. The value sales and share of specialists therefore increased in 2017, in turn limiting the potential of grocery retailers and other non-specialist retailers.

Opposing factors set to lead to slower growth over the forecast period

Pet care is set to record further, albeit slower, value growth over the forecast period. With an almost stagnant pet population and the increasing significance of alternative products, the industry’s volume growth potential will remain limited. Growth can therefore only be generated by prevailing premiumisation trends, including higher levels of segmentation, specialisation and the exploitation of innovative products. Natural and organic or more emotionalised products and designs are likely to remain key factors to future success. An additional limiting factor will likely be increasing competition due to the growing popularity of private label products.

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